EPA puts Keystone XL timeline in doubt: Analyst

TransCanada Corp. has said it thinks the U.S. State Department will finish its review this year of its Keystone XL pipeline to move 700,000 barrels of oilsands crude per day from Alberta to refineries along the Gulf Coast but Deutsche Bank chief energy economist Adam Sieminski says he “harbours some doubts.”

In an analysis of the second review ordered this week at the insistance of the U.S. Environmental Protection Agency, Sieminski says the depth and breadth is so enormous it makes any schedule unlikely.

“EPA has asked for: more spill detectors, more cut-off valves, more effort to predict movement of spilled oil, disclosure of diluents recipes, more detailed data concerning alternative routes around the Ogallala aquifer, more consideration of the impact on low-income and tribal communities, deeper review of health impact around the Gulf Coast refineries, more work on life cycle GHG emissions, more efforts to avoid building in wetlands, and further studies on migratory birds.”

“Each of these requests alone appears reasonable, but together, they seem to us to create a nearly impossible-to-achieve assessment that could indefinitely tie-up the State Department, either directly in responding to the requests or indirectly by establishing a basis for a lawsuit.”

Sieminski says the delays are costing North American producers because there is surplus crude in the U.S. mid-continent with no pipeline to move it to where it’s needed. The glut is a factor in the inability of West Texas Intermediate prices to keep pace with London Brent prices, leading to record differentials.

“If EPA has their way, it looks to us that it won’t be Keystone that manages to get the job done,” he concludes.

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